Tax News & Views Bread & Taxes Roundup

October 2, 2020

Employers get guidance on income tax withholding from wages – Allistar Nevius, J.D., Journal of Accountancy. “The IRS issued guidance to employers on Thursday regarding the amount of federal income tax to withhold from employees’ wages. The guidance comes in final regulations (T.D. 9924) the IRS posted to its website, which implement changes enacted in the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, and reflect the redesigned Form W-4, Employee’s Withholding Certificate, the IRS has already issued and updated guidance in other IRS publications.”

Estimated Tax Payers Get More Options in Final Withholding Rules – Eric Yauch, Tax Notes($). “The final rules (T.D. 9924), released October 1, are generally meant to complement the recent modifications to the W-4 that reflect changes made by the Tax Cuts and Jobs Act, such as the removal of personal exemptions.”

The proposed and final regs do allow for estimated taxes to be accounted for.

“Like the proposed regulations, the final regs allow employees to take already-paid estimated taxes into account when they’re filling out their W-4s. But the final regs go further by also allowing some employees with relatively high non-wage income relative to their wage income to take into account their planned estimated tax payments. That means if an employee is completing a W-4 in March and she knows she'll have significant income that’s not subject to withholding, she needs to make estimated tax payments and the final rules address how to account for that.”


House Passes Revamped COVID-19 Relief Bill With NOL Limit – Jad Chamseddine, Tax Notes($). “The House passed on a 214-207 vote a revamped bill to provide COVID-19 relief with a controversial provision limiting the ability to carry back net operating losses.”

“House Speaker Nancy Pelosi, D-Calif., told reporters that the administration objected to reducing the number of years a corporation can carry back NOLs. The updated HEROES Act, as in the original version, would permit a company’s losses from 2019 and 2020 to be carried back only to January 1, 2018, instead of the five years allowed in the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).”


Pelosi knocks GOP for insufficient funds in COVID-19 relief offer – Mike Lillis, The Hill. “The Speaker also pointed to another major sticking point preventing a last-minute stimulus deal: the Republicans' demand to continue a $150 billion tax benefit largely serving wealthy real-estate investors — which was tucked into the CARES Act in March — while resisting the Democrats' demand for $54 billion in tax credits for lower-income families.”


Moody’s Downgrades New York State, New York City Credit Ratings – Heather Gillers, Katie Honan, and Jimmy Vielkind, WSJ($). “Ratings concern cites mounting toll of coronavirus pandemic on state and local economies, with sales-tax and income-tax revenues cratering”


IRS Highlights Common Mistakes on Advance Payment Credit Forms – Eric Yauch, Tax Notes($). “Employers filing for the advance payment of qualified sick leave and employee retention tax credits are doing so on a new form, and there have been bumps along the way, Melissa Duce, senior technician reviewer (employment tax 2), IRS Office of Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes), said October 1 during an American Bar Association Section of Taxation virtual meeting.”

IRS releases final rules on business meals and entertainment – Paul Bonner, Journal of Accountancy. “The IRS on Wednesday issued final regulations (T.D. 9925) implementing provisions of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, that disallow a business deduction for most entertainment expenses. The regulations also clarify the treatment of business deductions for food and beverages that remain deductible, generally limited to 50% of qualifying expenditures, and how taxpayers may distinguish those expenditures from entertainment.”


Irish High Court Rules Subway’s Sandwich Bread Is Not Legally Bread – Kelly Phillips Erb, Forbes. “The Irish Supreme Court has ruled that the bread used to make Subway sandwiches cannot be defined as bread. The ruling was the result of a tax case. Bookfinders Ltd, a Subway franchisee, claimed that it should be exempt from value-added tax (VAT) since many products it sells are considered “staple foods.”

“Ireland’s Value-Added Tax Act of 1972 sets definitions and tax rates for various products, including bread. To be exempt under the Act, the bread must meet the requirement that “fat, sugar and bread improver, subject to the limitation that the weight of any ingredient specified in this subclause shall not exceed 2 per cent of the weight of flour included in the dough.” The sugar content in Subway’s bread options is about 10% of the total weight.”

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